Oz Budgets: the Unhappy meet the Disappointed. Big Defence numbers get small. & the cage fight in Beijing

In history, a retreat from Singapore can have hairs all over it, but Richard Marles has turned that around, as the Grumpy Strategists unpack the events. At Singapore's Shangri-La dialogue, Mr Marles faced down an America First Pete Hegseth, meeting the Pentagon chief's fiery lethality towards allies with his own Aussie cold steel.The result is Australia's AUKUS deliverables are now 3 used US Virginia class subs sometime in the 2030s instead of the earlier stupid idea of getting a new sub as part of the deal.There's celebration in the streets here in Canberra now that our fears that we might get a new submarine of any kind sometime in the next 20 years have been laid to rest. Australia is moving towards global best practice in aged care for submarines with our Collins class fleet....now that we've cancelled their life extension program (??).....We must not let this national skill wither, but apply it instead to subs with nuclear reactors on board. Mr Marles and his colleague Pat Conroy seem to understand this intuitively in a way others don't.Marcus channels his inner Marles to show us the benefits of this 'chase for simplicity' and 'cost savings' through a standalone fleet of 3 used subs. It's a tweak to what we had previously understood was a uniquely complex and costly but deeply integrated 3 nation AUKUS program.The episode deals with Minister Marles' greatest fears. And with clown spiders, one of Michael's. It also shows the difference between an AUKUS Pillar 2 "Signature" project and the highly anticipated "Marquee" project many had expected. Hint: you can fit many signatures onto one marquee.

Marcus and Michael go through the scandalous revelations about 10 years of failed planning on extending the operational life of the only submarines Australia has - the 6 Collins class - while AUKUS subs slowly appear. Disturbingly, the most senior Defence leadership - including the Secretary and the Chief of Navy (just promoted to be the chief of the entire military) were advised numerous times of insurmountable technical and engineering issues with the planned life extension. The main motors and diesel generators took up more room and would require a major redesign of the entire submarine, and the result would be a sub that had to "snort" for longer and so be more vulnerable. The whole project collapsed under the weight of its flaws because an external Audit got the story out.But for years, the leadership failed to advise Government ministers. A report by a former US Defense official belled the cat in 2024 to ministers, but neither ministers nor the Defence senior leadership revealed the scandals to the public or the Parliament. Instead they kept spending $100s of millions on failure. The result is Australia's only submarines are now in aged care, limping along until the AUKUS cavalry turns up. Meanwhile, the leadership has had promotions all round.This is an insight into how AUKUS is being managed by our Defence leaders and ministers.The episode ends with a dose of truth from the UK's First Sea Lord that the Royal Navy's pursuit of ever bigger, ever more expensive platforms is a mistake - as the huge Dreadnought subs, the Type 26 and SSN-AUKUS projects sail on eating the UK military's future.

Michael and Marcus argue furiously over the merits and messages in the Albanese Govt budget versus Opposition leader Angus Taylor's response. Only one of them is right....Then Marcus burrows deep into Parliament House to find a phone to talk numbers with the Defence Chief Finance Officer. Result: a $14 billion cash bump for Defence spending over the next 4 years turns into a $1.2 billion reduction, like magic. Michael recovers from the shock of being kicked off Air Force One on its way to Beijing to listen in as a returning Donald Trump finds two buses to throw Taiwan under in his quest for a growing market for American beans. The episode ends with a trot through global demographics and the disturbing raw numbers on naval shipbuilding out of China and America. One nation is building a big new blue water fleet. The other is holding its breath saying it wants to. Premium Economy back to the SAA bunker can't land fast enough in this unravelling world.

A Zen temple helps Marcus seek balance between the contradictions in Australia's defence Strategy, while Michael struggles with a noisy kettle in the bunker. Australia's new Defence Secretary takes over the much smaller empire left by her predecessor - and brings skills to help Minister Pat Conroy produce new numbers around new 'announceables' at will. Secretary Quinn has arrived in the nick of time, right as Mr Conroy's alchemy of announceables post-strategy launch seeks to sell US Defence Prime Northrop Grumman building rocket motors in Australia by 2033 as an example of the urgent creation of sovereign Aussie sovereign industry. It's beautiful to watch Marcus apply his new mindfulness tools in a doomed but noble attempt to set out the maths behind the big new spending claims of the Australian Government in recent weeks. The episode covers the growing distortion of Australia's military towards things on the water over things in the air and land - despite Australia being a country surrounded by both water and air....and it finishes up with US sub numbers and the breath of fresh air injected into Australia's defence debate by Senator Paterson, daring to notice things like delays in big programmes, and thinking beyond the usual beat ups.

The Grumpy Strategists respond to Australia's defence minister, Richard Marles, discussing and releasing the 'new' 2026 Defence Strategy and investment plan. Marcus sees the spirit of Hiroo Onoda, second last Japanese Imperial Army soldier to surrender after World War Two - 29 years after the war ended in March 1974 alive in Mr Marles today.Like Hiroo, Mr Marles carries the flame of a world that has ended. In Hiroo Onoda's case it was faith in the Emperor and Imperial Japan's impending victory. In Mr Marles' case, it's in an America that remains the beacon of freedom, democracy and liberal values, source of global stability and anchor of the rules based international system. Both Onoda and Marles are romantics with a streak of obsession in their nature. Hiroo didn't get to determine his nation's defence policy, though.Then it's into the hard numbers of the new plan, including the combination of forensic accounting and clairvoyance needed to understand where the massive new headline Defence budget could have emerged from. The episode ends with mines and the curious case of Pete Hegseth accidentally channeling the spirit of Quentin Tarantino and a 1970s Japanese martial arts movie instead of God.....We're in good hands.

Back in the SAA Bunker deep in the Brindabellas, Marcus & Michael declare energy independence (okay, thanks to government subsidies) and ponder the details of the Trump Administration's new Defense budget. $1.5 trillion dollars delivers an all you can eat buffet of spending for everyone involved in the Military Industrial Complex. The traditional big end of town - Lockheed, RTX Raytheon, Northrop and Boeing get cash, & so do tech bro outfits like Anduril & Palantir. Just the US Army's missile budget is now bigger than the total budget of the US State Department - take that you peacenik diplomats. America First is looking like not just having a Department of War, but an entire Government of War. There are some minor problems: 1. given the real world usage rates in Iran, this 43% increase in annual spending won't produce enough expensive missiles & interceptors to fight even a short war with an adversary like China - so, not the strongest deterrent message. And 2. it looks a courageous assumption to think that US defence industry can ramp up at the scale and speed this cash splash desires. The budget describes a bad plan, that fails to adjust to the practical realities revealed in the Iran war - unless the plan is to be able to fight anyone except China or Russia.....

Marcus calls into the Grumpy Strategists' Brindabella bunker with unwelcome news on more diesel supplies. After this disappointment, the Grumpies ponder the mystery of the Gulf War - a war without belligerents. Everyone is telling their populations that they are not at war, just engaged in military operations or acts of 'collective self defence'. Here in Canberra, PM Albanese has to remember which side of his mouth he's speaking out of - the quietly supportive "I sent a Wedgetail and I know the US military loves it" side for Washington, or the "Australia has no part in this unpopular war we're just helping our good friend the UAE" side when talking to the Australian people. Then they discuss the paralysis in Australian force structure planning and the contribution that "bipartisanship" on defence policy is causing, right when both major parties are increasingly on the nose.

Well, despite the great news from Energy Minister Chris Bowen that Australia faces no energy crisis other than silly unwashed Australians panicking, the Iran War has already created a global energy crisis even if it stops now. That's less about whether the Strait of Hormuz is open and more about the broader damage already inflicted on Gulf infrastructure. Marcus journeys to Oodnadatta to pick up some premium diesel bargains - without any sign of panic.Taking a break from the War gives space to admire honorary Kentucky Colonel Richard Marles' (who is also probably still Australia's Defence Minister) latest masterclass in not answering questions: a new Personal Best from the Colonel is 11 questions, 13 deflections and zero answers. Super Bowl stuff.Then the Grumpies dive into the picture for Australia's AUKUS submarines from data about US and UK partners' actual experience maintaining and operating their nuclear subs. Best case for Australia is after 30 years (when Australia gets 8 submarines) we will be able to consistently deploy 2....Hmmmm.

President Eisenhower's 1961 farewell address warning of the US Military Industrial Complex echoes in Canberra today - but with industry and products replaced in the Canberra version by advisory services, post-career consultancies and invoices.Marcus and Michael discover that biofuel brewing isn't so easy even in a fuel crisis. Feedstock like the National Anti-Corruption Commission's (the NACC) indigestible and philosophically inventive 445 page report into the huge Robodebt scandal proves toxic enough to break the process.And the Grumpy Strategists attend another funeral of a fallen warrior for accountability and transparency when it comes to the $billions spent on Australia's faltering military - the now deceased but invaluable Major Projects Report, killed quietly by a Parliamentary committee that should know better. A new secret Parliamentary committee is apparently the antidote. But anyone who expects Defence's poor performance to improve because it talks to a few well-disposed politicians in a dark room is probably suffering from exposure to the NACC's report..It's a lengthy episode but an important one for anyone interested in how the Canberra bureaucratic machine's most senior levels engage with our political leaders - and keep doing so after both the politicians and the senior Mandarins have left their official roles. It's also a depressing story of comfort zones and single sources of advice that often turn out to be wrong.The latest effort from the now embarrassing National Anti Corruption Commission will be reassuring to anyone who thinks things are peachy - like, say, a former or current Canberra Mandarin. But not to anyone who cares about Australia's security, public services or future.

Marcus and Michael get serious about biofuel, with a novel feedstock straight from Defence's Russell Offices. They look at the rapidly expanding Iran War, with multiple US partners getting pulled into a messy patchwork, all desperately trying to quarantine their roles into a defensive effort. They explain the Australian policy to ensure no ADF personnel are involved in attacking Iran, even when they are (hint: closing eyes at critical moments helps). The missile supply issues have intensified, with US production being diverted to the war and other forces' orders being delayed - probably by years. Despite the war apparently being way ahead of schedule, Iran's attacks are continuing, Israel is evacuating citizens away from Hezbollah drones, and US diplomats are leaving Saudi and Turkey. The episode ends with a capability roundup for Australia - pricey Peregrines, artisanal K-9s, maritime precinct sketches and broken submarines.